Social Market Economy for Developing Countries

In a society where wealth does not trickle down to the poor, and where poverty is a crippling issue, government has to step in to ensure that economic opportunities are not restricted to only a few.

Free market is defined as an economic system based on supply and demand with little or no government control. While less market restriction and external intervention is ideal for economic freedom, developing countries like Indonesia need social protection mechanisms to attain inclusive growth.

The agricultural sector in Indonesia covers 34% of the country’s total employment, majority of whom live below poverty line. To address this, the government allocates funds that enable farmers to buy seeds, fertilizers, and rice at subsidized prices. However, government agencies acknowledge that this support is ineffective.

The Center for Indonesian Policy Studies (CIPS), a member of EFN Asia, reviews the social protection schemes for agricultural workers in Indonesia, and recommends solutions to assist farmers, and ultimately create long-term measures against poverty.